Donald Trump on election night in West Palm Beach, Fla., Nov. 5, 2024. (Doug Mills/The New York Times)
KUALA LUMPUR: Donald Trump’s upcoming economic policies are expected to significantly impact Malaysia’s economy, with projections indicating that they could contribute RM19.7 billion to the country’s gross domestic product (GDP).
Juwai IQI co-founder and group chief executive officer Kashif Ansari opined that Trump’s direction and goals are clear.
"We also have the record of the first Trump presidency as precedent, and we can deduct from the team he has selected for his cabinet.
"One key policy Trump is expected to enact is the extension and intensification of tariffs on Chinese goods,” he said in a statement today.
Kashif said this would result in Chinese and international firms going even further than they have over the last eight years to shift manufacturing out of China and into Southeast Asia.
He said this policy alone could contribute an additional one percentage point to Malaysia’s GDP over four years.
"A single percentage point increase in GDP works out to be an RM19.7 billion increase in the size of the economy.
"To make that number more tangible, consider that it is equivalent to about 40 per cent of the cost of the East Coast Rail Link,” he said.
The International Monetary Fund (IMF) projects that Malaysia’s 2024 GDP will be US$440 billion (US$1 = RM4.48), of which one per cent of that total is US$4.4 billion, equivalent to RM19.7 billion at current exchange rates.
Kashif highlighted that in 2021, the last year of Trump’s first administration, Malaysian exports to the US reached US$56.2 billion, a 27.3 per cent increase from the previous year.
By that year, Malaysia was exporting US$41 billion more to the US than it was buying from that country, one-third more than the year before.
"During the years of Trump’s first presidency, Malaysia’s economy grew annually by 5.8 per cent in 2017, 4.8 per cent in 2018, and 4.5 per cent in 2019, before contracting in 2020 because of the pandemic,” he said.
The Trump tariffs on Chinese goods also drove billions of ringgit of investment into Malaysia and made it a key player in the ‘China Plus One’ strategy, where companies move manufacturing outside of China to
avoid steep US tariffs on Chinese goods.
That investment kept growing during the Biden years, and by 2023, China and Hong Kong foreign direct investments totalled US$3.4 billion annually, triple the level of 10 years earlier.
Kashif cautioned that there are risks and rising inflation in the US could push interest rates higher.
"That could draw capital from Malaysia in the expectation that it will earn higher returns in the US.
"It could also drive up to the US dollar, raising costs and reducing export competitiveness for Malaysian manufacturers who depend on imported equipment,” he added. - Bernama
